Looking around the new home landscape there isn’t a lot of building going on, but at JMC’s communities there are new homes being built all of the time. This different strategy has had many advantages for buyers, Realtors and for JMC. What are some advantages to a 1 or 2 month escrow vs. 6 to 8 months?
Obviously, you don’t have to wait around for the home to start. This allows you to lock in a great mortgage rate and with the quick turnaround on offers you can know up-front what you are going to pay, unlike short-sales and foreclosures. The homes are already loaded with designer upgrades that are included in the price, so there are no surprises after visiting the design center. Since the home is already built you can “kick the tires” and really get a feel for how it will fit your family.
And, it is oh - so much nicer that an REO! LOL - You'll pinch youself!
Who qualifies as a first time home buyer? That is a valid question. To answer it is important to know "who" is asking. The general definition is: Someone that has not owned a home in the past 3 years would be considered a 1st time home buyer. The word "home" becomes a key point. To prove lack of home ownership a buyer is required to provide copies of three years 1040 tax returns. Lenders, or agencies verify that no mortgage interest was deducted for those years.
But, what about the buyer that has owned real estate rental that was not the primary residence "home" for the last 3 or more years? Ironically, often that buyer does qualify for the down payment assistance. The items needed to prove the point:
* Copy of the rental agreement or lease for the primary residence
* Copy of the tax bill for the "other" property proving that it is "absentee owner".
If you are in this position, ask your lender to check with the DAP agency to see if you would qualify. Most lenders will automatically dismiss you.
If you are divorced and filed joint returns with your X using the interest deduction, again ask your lender to check with the agency providing the down payment assistance. If you can prove that during this time you maintained a separate residence, providing a copy of your lease or rental agreement you could be a winner.
Additionally, I have found that often previous home owners who have lost their homes through short sale or foreclosure often disqualify themselves as first time home buyers. The key here is the timing... If the transfer OUT of your name occurred over three years ago... you may qualify. I say may, because again it depends on the agency. Some agencies will "pro-rate" meaning go by the date on which the transfer occurred. Others want the whole year free from interest deductions before you will be considered a First Time Home Buyer and gain the extra benefits associated with the program.
The benefits include down payment assistance by various degrees and the Mortgage Credit Certificate mentioned below.
As a first time home buyer you may also qualify to have Uncle Sam apply 20% of the interest paid on your loan towards your income tax liability. For information on MCC click here.
I'm always happy to answer questions... feel free to contact me.
Choose your loan, before you shop for your home. There are two main types of loan catagories; Conventional Loans and Government Loans.
The loan options available to you will be determined by:
* Down Payment
* Loan Amount
* Loan to value or need for mortgage insurance
* Credit score
* Property Type
Down payment: If your assets allow a down payment of 10% or more then a conventional loan may be a worthwhile consideration. The mortgage insurance costs will be lower and it may be possible to remove the mortgage insurance earlier than on the government counter part. FHA requires a minimum 5 year current payment history where as mortgage insurance is written for a minimum of 24 months. - That is without additional principle reduction, in which case the mi would be removed.
Loan Amount: If your loan amount is $417,000 or below in the continental US, an FHA, VA, USDA or Conventional loan are your options. If over the $417,000 then your transaction would fall into the JUMBO loan category. September 2011 is the latest that FHA loans may be funded up to the $417,000 loan amount. We will have to see what the new maximum loan for FHA will be after that date.
Loan to Value: If your down payment will be less than 10% then you'll fare better with a government loan. FHA still requires 3.5% down payment all of which could be a gift or a combination gift/grant etc. VA requires no down payment from qualified Veterans with full eligibility. USDA also provides 100% financing however, the property be located in a less populated or rural area.
Credit Score: Credit scores play an important role in the options for financing. If you combine scores and down payment... 680 is the minimum mid credit score allowable for a conventional loan with a down payment under 20%.
Property Type: Not all loans are available for all types of properties. Most notably, condominiums. Condos need to meet certain requirements for both FHA and conventional loans. The approval requirements are quite stringent. Some condo's meet FHA standards, some Fannie Mae and some both or VA. Most condos will not be in an area that conforms to USDA requirements.
It is for all of the above reasons that wise buyers start early with an informed lender. A lender that presents all options available. Some options are more attractive to the lender, or broker... but an alternative program or layered program might prove the most advantages to a customer.
Pre qualification is as much about finding the options available to you as it is choosing which option or combination of options will be best as it is to satisfy yourself,( the Seller and agents) about your ability to conclude a positive end and close the purchase transaction.
For questions or more information feel free to contact me at: ipierson@teamvitek.com
An early Easter present has been announced by FannieMae who in an effort to stabilize communities through the speedy resale of Fannie Mae owned homes is providing buyers with a 3.5% credit towards closing costs. This extra credit is being offered on Fannie Mae "HomePath Properties". The HomePath loan also available for borrowers to use in the purchase of these homes includes an additional "no appraisal" required benefit and a 3 to 5% down payment. The 5% can be a gift. The "catch" on the closing credit is that the contract needs to be written AFTER April 11th 2011 and escrow MUST close by June 30th, 2011.
In this situation, again... It is crucial to be pre-approved with a lender BEFORE shopping for your home. If you aren't pre approved, and by that I mean that the lender has ALL your documentation... w-2′s, pay stubs, bank statements, rental history... etc. and preliminary underwriting. You may not meet the closing time frame - especially if you haven't written a contract as yet.
Good luck in the "hunt". There are great homes, great prices and great rates for current house hunters. Best of luck.
As always, I can be reached via e mail for comments or questions...
Finding the loan that is "right" for you and your family. Tip Number 6 is that you should meet with a qualified lender to review program types BEFORE choosing a home. It is important to know what type of loan and which program before going out shopping to avoid disappointment.
Essentially there are two types of loans; Conventional and Government. From there they break down into sub categories. The conventional loans fall under Fannie Mae, Freddie Mac and RFC (Jumbo) guidelines. Government loan categories include; FHA, VA, CalVET and USDA. These programs all have different types of mortgage insurance for loans with down payments of less than 20%. Conventional loans work with private mortgage insurance companies, government loans utilize government mortgage insurance (FHA) VA guarantee Fee; USDA government Mortgage insurance, CalVET - Guarantee Fee.
Each of these loans has different requirements. Some, such as USDA, have geographical restrictions. The loans also have varying property requirements. For these reasons alone it is critical that a buyer knows which type of loan before house hunting since some properties may be excluded due to condition or location.
It is therefore wise to know which loan works best for you and your family... then have a "back up" loan or program that would work IF your primary loan is not an option. But, if as a first time buyer you really have only one option... say 100% VA financing, then you would want clear communication between your lender and your Realtor about the property types and specific nuances of your loan which may require upfront negotiation for your home purchase to become a reality.
For more information visit: http://www.ingridpierson.com
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My passion is to help home buyers. I navigate programs and combos to fulfill dreams. Expect the peace of mind that comes through my experience, expertise, and personal care.
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